In a standoff deemed a “tech Cold War,” Huawei secured a contract with Russia's MTS network operator this week in order to develop a 5G network over the coming year.
Russian sovereign wealth fund says US allegations that Huawei poses a national security threat are unproven and unfair. The head of Russia ’s sovereign investment fund has now urged the US to back-up those claims.
Speaking to CNBC’s Geoff Cutmore at the St Petersburg International Economic Forum (SPIEF), Kirill Dmitriev, the chief executive of the Russian Direct Investment Fund (RDIF), said the US had failed to provide evidence that Huawei actually brings a security risk.
Dmitriev was asked if he had concerns about Chinese surveillance. “First of all, it has not been proven. We need to have some really clear evidence and I’m sure our people will look into this and, if it happens, it will not be the case,” Dmitriev said.
“But, what we are concerned about is allegations like this are thrown in without any proof and used for unfair practices,” he added.
The new agreement between Russia and Huawei could improve predictions saying that the Chinese company won’t do well on the market this year, as a result of missed business opportunities with the US.
Huawei has already “downgraded its forecast for total smartphone shipments in the second half of 2019 by about 20% to 30% from the previous estimate,” according to a report in the Nikkei Asian Review that cited “a source familiar with Huawei smartphone orders.”
The company has also “reduced or canceled orders to major suppliers for components that go into its smartphones and telecom equipment,” according to the report. Some of the supply chain reductions “included cuts to orders of as much as 30%.”
This is one of the consequences from the U.S. blacklist on Huawei’s supply chain, which as Forbe’s Zak Doffman, who’s been closely following the issue says, “is hitting much harder and faster than anyone expected.” Despite Huawei maintaining its number two spot for global smartphone sales in the first quarter of 2019, it was expected to struggle for the remainder of the year before Russia signed.
Google and Huawei
Google is reportedly urging the Trump administration to lift the ban that would prevent them from doing business with Huawei, also citing security concerns. Google has warned Washington of potential risks to U.S. national security should Huawei Androids not have Google apps installed on them.
After the US government placed Huawei on the blacklist that restricted it from trading with US companies, Google accordingly restricted Huawei’s access to its Android operating system.
Huawei would then be allowed to use an open-source version of Android, but that means its phones will not come pre-loaded with Google apps like Google Play Protect, which is a security feature. Google Play and other Google apps would also be missing from the Huawei devices.
According to Google, allowing Huawei to run its own version of Android is a security issue, The Verge reports, citing Financial Times.
Google Play Protect runs safety checks on apps, checks for malware-laden apps, removes harmful apps, and warns about high-risk apps. Without it, Google says, Huawei phones will be “more at risk of being hacked, not least by China.”
However, to resolve this issue, Huawei might create its own operating system (OS). Last month, Richard Yu, CEO of Huawei’s business consumer group, said a Huawei-made OS could be produced by spring 2020 at the latest. The OS would be compatible with smartphones, PCs, tablets, TVs, cars, and wearables, and also be compatible with Android apps. Huawei allegedly still prefers to use Android or Windows, though.
Trump responded to Google’s concerns. “We are going to have absolutely an agreement on Huawei and everything else,” Trump said during a joint press conference in London on June 4. “We have an incredible intelligence relationship and we will be able to work out any differences. This is a truly great ally and partner and we will have no problem with that.”
“There are genuine national security risks at play in Huawei’s battle with Washington. But there is also the backdrop of a world that is dividing technologically.” Doffman from Forbes. “The real issue, though, is that a Chinese alternative to the world’s most popular smartphone OS risks disrupting the global smartphone ecosystem.”
“Huawei is too important to China for China to let it fail,” Doffman says.
The US’s accusations are contagious
Though Russia has called out the US for circulating unchecked allegations that Huawei jeopardizes national security, the UK’s Huawei Cyber Security Evaluation Centre (HCSEC) Oversight Board differs. The HCSEC issued a report which said that it “continued to identify concerning issues in Huawei’s approach to software development bringing significantly increased risk to U.K. operators.”
However, Huawei seems to be negotiating negative remarks. “We are willing to sign no-spy agreements with countries,” Huawei Chairman Liang Hua told reporters in Shenzhen when asked if the company is open to having an agreement about surveillance with the U.S. The same agreement had been offered to both the UK and Germany.
“Since the U.S. has not bought from us,” Huawei’s Chairman Liang told reporters, “is not buying from us, and might not buy from us in the future, I don’t know if there is such an opportunity to sign such an agreement.”
Regardless, the Technical Director of Britain’s National Cyber Security Centre criticized Huawei technology as “shoddy.” In the 2019 report, the U.K.’s Huawei evaluation center also claimed the company failed to make improvements since the time of last year’s report.
Despite the US’s many allegations about Huawei, outgoing Prime Minister May eventually allowed Huawei into parts of its 5G network. The decision sparked backlash from the US.
Teresa May is due to soon step down as PM, and it is possible that her replacement will overturn the Huawei decision.
The European Union, on the other hand, advised member countries to “proceed with caution,” meaning countries should conduct their own risk assessments of the 5G equipment and then to decide what’s best.